ACA: Alaska premium shock

[Fermion]

I have mentioned our plan to travel to Alaska for a year or two. Since this is a significant amount of time and we will not own a home or have a job in any other state, I was thinking we would establish domicile there. I do not intend to claim the oil permafund payment (for one thing you have to be there a full calendar year first).

I checked the ACA plan rates and had to raise our income up to $28,000 for a married couple no kids in order to get out of Medicaid range (that is significantly more than the $22,000 in Washington state).

Oh my. The rates are insane. A silver plan PPO blue cross blue shield is $1900 a month for essentially the same plan that is $700 a month in Washington state. The subsidy is huge (over $1600) at a $28,000 income level and brings the premium down to $300 a month.

Two things come to mind.

1) I am thinking because of the vast difference in premiums that a lower 48 policy is pretty much worthless in Alaska except for emergency treatment. This means you would want to establish residency in Alaska.

2) Should we stay in the lower 48 for a year so we have a tax return that proves lower income? If we go to Alaska next year and have trouble proving income because of high 2014 and medium 2015 income, the $1900 a month we have to pay for insurance would be a massive fraction of our monthly budget. I realize we would get it back at tax time when we file our actual MAGI number but...

 

[papadad111]

As long as this is just a timing issue, with respect to cash flows and you have liquid funds to pay the insurance I would not delay "living life" due to timing of insurance premium rebate/ refunds .... Doing that, to me, is the tail wagging the dog ..life is short.

 

[rodi]

As long as this is just a timing issue, with respect to cash flows and you have liquid funds to pay the insurance I would not delay "living life" due to timing of insurance premium rebate/ refunds .... Doing that, to me, is the tail wagging the dog ..life is short.

I agree with papadad111... For different reasons we do not get the subsidy up front (a quirk of CoveredCa.gov) - and will get it back when we file our taxes. As long as you keep your income within limits, and can cover the cash flow to pay the full premium, you can get the premium subsidy tax credit, after the fact.

 

[FUEGO]

+1 - Just do it. Fund the premiums with a 0% credit card offer if you don't have cash on hand and don't want to warp your withdrawal plan.

 

[ziggy29]

It sounds like you'd be OK after the tax credits.... if you can afford to eat the higher payments until you can get most of them refunded, if you want to go to Alaska, go to Alaska!

"North to Alaska, we go north, the rush is on." -- Johnny Horton

 

[Fermion]

Thanks. I do agree with you and we could fund the premium payments pretty easy from cash on hand without liquidating investments.

One slight problem is the difference between the 134% of poverty levels. I had planned in Jan to tell Washington state that our income was $22,000, but if we then go to Alaska in May and get on a policy up there in June we would need at least $28,000 to get above 134%. I am not sure what happens to the previous subsidy we would have gotten in Washington state if we do a Roth conversion or something in Alaska to get above $28k.

Essentially we would have the same % above poverty level in both places but on our tax return the MAGI would be quite a bit higher than we had told Washington. Do you think they do some sort of split state adjustment for calculating your subsidy at tax time?

 

[audreyh1]

I don't think you are obligated to establish residency in Alaska if your intention is a temporary stay, even if it is for a year.

I don't think you should switch policies.